Decision Support Systems and Business Intelligence
1.1 NORFOLK SOUTHERN USES BUSINESS INTELLIGENCE FOR SUCCESS
/One of the four large freight railroad in US.
/NS moves approximately 500 freight trains across 21,000 route miles in 22 eastern states.
/NS has more than $26 billion in assets and employs over 30,000 people.
/For more than a century, NS makes money by managing their costs
/Managers focused on optimizing the use of railcars to get the most production out of their fixed assets.
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/In 1980, the industry was partially deregulated, which opened up opportunities for mergers and allowed companies to charge rates based on services and enter into contracts with customers.
/On-time delivery became an important factor in the industry.
/NS responded by becoming a “scheduled railroad”--developing a fixed set of train schedules and a fixed set of connections for cars to go between trains and yards.
/NS required new systems that would first use statistical models to determine the best routes and connection to optimize railroad performance, and then apply the models to create the plan that would actually run the railroad operations.
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/This new system was called Thoroughbred Operating Plan (TOP). It was deployed in 2002.
/NS realized that it was not enough to run the railroad using TOP-it also had to monitor and measure its performance against the TOP plan.
/NS numerous systems generate millions of records about freight records, railcars, train GPS information, train fuel levels, revenue information, crew management, etc.
/Unfortunately, NS was not able to simply tap into this data without risking significant impact on the system’s performance.
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/Back in 1995, the company invested in a 1-terabyte Teradata data warehouse, which is a central repository of historical data.
/The data is easy to access (using a Web browser) and can be manipulated for decision support.
/The warehouse data come from the systems that run NS (i.e., source systems), and once the data is moved from the source systems to the warehouse users can access and use the data without risk of impacting operations.
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/In 2002, the data warehouse became a critical component of TOP.
/Norfolk Southern built a TOP dashboard application that pulls data from the data warehouse and then graphically depicts actual performance against the trip plan for both train performance and connection performance.
/The application uses visualization technology so that field managers can more easily interpret the large volumes of data (e.g., there were 160,000 weekly connections across the network).
/The number of missed connections has decreased by 60 percent since the application was implemented. And, in the past 5 years, railcar cycle time has decreased by an entire day, which translates into millions of dollars in annual savings.
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/Norfolk Southern has an enterprise data warehouse, which means that once data is placed in the warehouse, it is available across the company, not just for a single application.
/Although train and connection performance data is used for the TOP application, the company has been able to leverage that data for all kinds of other purposes.
/For example, the Marketing Department has developed an application called accessNS, which was built for NS customers who want visibility into NS’s extensive transportation network.
/Customers want to know where their shipments are “right now”—and at times they want historical information: where did my shipment come from? How long did it take to arrive? What were the problems along the route?
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/accessNS allows more than 14,500 users from 8,000 customer organization to log in and access predefined and custom reports about their accounts at any time.
/Users can access current data, which is uploaded hourly, or they can look at data from the past 3 years.
/accessNS provides alerting and RSS feed capabilities; in fact, 4,500 reports are pushed to users daily.
/The self-service nature of accessNS has allowed NS to give customers what they want and also reduce the number of people needed for customer service.
/Without accessNS, it would take approximately 47 people to support the current level of customer reporting.
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/Departments across the company—from Engineering and Strategic Planning to Cost and Human Resources—use the enterprise data warehouse.
/One interesting internal application was developed by Human Resources. The department needed to determine where to locate its field officers in order to best meet the needs of NS’s 30,000+ employees.
/By combining employee demographic data (e.g., zip codes) with geospatial data traditionally used by the Engineering Group, Human Resources was able to visually map out the employee population density, making it much easier to optimize services offices locations.
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/Today, the NS data warehouse has grown to a 6-terabyte system that manages an extensive amount of information about the company’s vast network of railroads and shipping services.
/NS uses the data warehouse to analyze trends, develop forecasting schedules, archive records, and facilitate customer self-service.
/The data warehouse provides information to over 3,000 employees and over 14,000 external customers and stakeholders.
/NS was the first railroad to offer self-service business intelligence, and its innovation is setting an example that other railroads have followed.
/NS was also one of the first railroad to provide a large variety of historical data to external customers.
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1.2 Changing Business Environments and Computerized Decision Support
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1.3 Managerial Decision Making
/Define the problem (i.e., a decision situation that may deal with some difficulty or with an opportunity ).
/Construct a model that describes the real-world problem.
/Identify possible solution to the modeled problem and evaluate the solutions.
/Compare, choose, and recommend a potential solution to the problem.
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1.4 COMPUTERIZED SUPPORT FOR DECISION MAKING
/Speedy computation. A computer enables the decision maker to perform many computations quickly and at a low cost. Timely decisions are critical in many situation floor.
/Improved communication and collaboration. Many decisions are made today by groups whose members may be in different location. Groups can collaborate and communicate readily by using web-based tools.
/Increased productivity of group members. Assembling a group of decision makes, especially experts, in one place can be costly. Computerized support can improve the collaboration process of a group and enable its members to at different locations (saving travel costs).
/Improved data management. Many decision involve complex computation. Data for these can be stored in different databases anywhere in the organization and even possibly at web sites outside the organization.
/Managing giant data warehouses. Large data warehouses, like the one operated by Wal-Mart, contain terabytes and even petabytes of data Computers can provide extremely great storage capability for any type of digital information, and this information can be accessed and searched very rapidly.
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/Quality support. Computers can improve the quality of decision made. For example, more data can be accessed, more alternatives can be evaluated, forecasts can be improved, risk analysis can be performed quickly, and the views of experts (some of whom are in remote locations) can be collected quickly and at a reduced cost.
/Agility support. Competition today is based not just on price but also on quality, timeliness, customization of products, and customer support.
/Decision support technologies such as intelligent systems can empower people by allowing them to make good decision quickly, even if they lack some knowledge.
/Overcoming cognitive limits in processing and storing information. According to Simon (1977), the human mind has only a limited ability to process and store information. People sometimes find it difficult to recall and use information in an error-free fashion due to their cognitive limits.
/Computerized systems enable people to overcome their cognitive limits by quickly accessing and processing vast amounts of stored information (see Chapter 2).
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1.5 COMPUTERIZED SUPPORT FOR DECISION MAKING
/Using the Wed. Wed provides (1) access to a vast body of data, information, and knowledge available around the world; (2) a common, user-friendly graphical user interface (GUI) that is easy to learn to use and readily available; (3) the ability to effectively collaborate with remote partners; and (4) the availability of intelligent search tools that enable managers to find the information they need quickly and inexpensively.
/Anywhere, anytime support. Using wireless technology, managers can access information anytime and from anyplace, analyze and interpret it, and communicate with those involved.
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Decision Support Systems and Business Intelligence1.1 NORFOLK SOUTHERN USES BUSINESS INTELLIGENCE FOR SUCCESS/One of the four large freight railroad in US./NS moves approximately 500 freight trains across 21,000 route miles in 22 eastern states./NS has more than $26 billion in assets and employs over 30,000 people./For more than a century, NS makes money by managing their costs/Managers focused on optimizing the use of railcars to get the most production out of their fixed assets.-----------------------------------------/In 1980, the industry was partially deregulated, which opened up opportunities for mergers and allowed companies to charge rates based on services and enter into contracts with customers./On-time delivery became an important factor in the industry. /NS responded by becoming a “scheduled railroad”--developing a fixed set of train schedules and a fixed set of connections for cars to go between trains and yards. /NS required new systems that would first use statistical models to determine the best routes and connection to optimize railroad performance, and then apply the models to create the plan that would actually run the railroad operations.---------------------------------------------/This new system was called Thoroughbred Operating Plan (TOP). It was deployed in 2002. /NS realized that it was not enough to run the railroad using TOP-it also had to monitor and measure its performance against the TOP plan./NS numerous systems generate millions of records about freight records, railcars, train GPS information, train fuel levels, revenue information, crew management, etc. /Unfortunately, NS was not able to simply tap into this data without risking significant impact on the system’s performance.--------------------------------/Back in 1995, the company invested in a 1-terabyte Teradata data warehouse, which is a central repository of historical data. /The data is easy to access (using a Web browser) and can be manipulated for decision support./The warehouse data come from the systems that run NS (i.e., source systems), and once the data is moved from the source systems to the warehouse users can access and use the data without risk of impacting operations.-----------------------------------/In 2002, the data warehouse became a critical component of TOP. /Norfolk Southern built a TOP dashboard application that pulls data from the data warehouse and then graphically depicts actual performance against the trip plan for both train performance and connection performance./The application uses visualization technology so that field managers can more easily interpret the large volumes of data (e.g., there were 160,000 weekly connections across the network)./The number of missed connections has decreased by 60 percent since the application was implemented. And, in the past 5 years, railcar cycle time has decreased by an entire day, which translates into millions of dollars in annual savings.--------------------------------------------------------------------/Norfolk Southern has an enterprise data warehouse, which means that once data is placed in the warehouse, it is available across the company, not just for a single application. /Although train and connection performance data is used for the TOP application, the company has been able to leverage that data for all kinds of other purposes./For example, the Marketing Department has developed an application called accessNS, which was built for NS customers who want visibility into NS’s extensive transportation network./Customers want to know where their shipments are “right now”—and at times they want historical information: where did my shipment come from? How long did it take to arrive? What were the problems along the route?-------------------------------------------------/accessNS allows more than 14,500 users from 8,000 customer organization to log in and access predefined and custom reports about their accounts at any time./Users can access current data, which is uploaded hourly, or they can look at data from the past 3 years./accessNS provides alerting and RSS feed capabilities; in fact, 4,500 reports are pushed to users daily./The self-service nature of accessNS has allowed NS to give customers what they want and also reduce the number of people needed for customer service./Without accessNS, it would take approximately 47 people to support the current level of customer reporting.--------------------------------------/Departments across the company—from Engineering and Strategic Planning to Cost and Human Resources—use the enterprise data warehouse./One interesting internal application was developed by Human Resources. The department needed to determine where to locate its field officers in order to best meet the needs of NS’s 30,000+ employees./By combining employee demographic data (e.g., zip codes) with geospatial data traditionally used by the Engineering Group, Human Resources was able to visually map out the employee population density, making it much easier to optimize services offices locations. --------------------------------------------------/Today, the NS data warehouse has grown to a 6-terabyte system that manages an extensive amount of information about the company’s vast network of railroads and shipping services./NS uses the data warehouse to analyze trends, develop forecasting schedules, archive records, and facilitate customer self-service./The data warehouse provides information to over 3,000 employees and over 14,000 external customers and stakeholders./NS was the first railroad to offer self-service business intelligence, and its innovation is setting an example that other railroads have followed./NS was also one of the first railroad to provide a large variety of historical data to external customers.--------------------------------------------------------------1.2 Changing Business Environments and Computerized Decision Support-------------------------------------------------------------1.3 Managerial Decision Making/Define the problem (i.e., a decision situation that may deal with some difficulty or with an opportunity )./Construct a model that describes the real-world problem./Identify possible solution to the modeled problem and evaluate the solutions./Compare, choose, and recommend a potential solution to the problem.--------------------------------------1.4 COMPUTERIZED SUPPORT FOR DECISION MAKING/Speedy computation. A computer enables the decision maker to perform many computations quickly and at a low cost. Timely decisions are critical in many situation floor./Improved communication and collaboration. Many decisions are made today by groups whose members may be in different location. Groups can collaborate and communicate readily by using web-based tools./Increased productivity of group members. Assembling a group of decision makes, especially experts, in one place can be costly. Computerized support can improve the collaboration process of a group and enable its members to at different locations (saving travel costs)./Improved data management. Many decision involve complex computation. Data for these can be stored in different databases anywhere in the organization and even possibly at web sites outside the organization./Managing giant data warehouses. Large data warehouses, like the one operated by Wal-Mart, contain terabytes and even petabytes of data Computers can provide extremely great storage capability for any type of digital information, and this information can be accessed and searched very rapidly. ---------------------------------------------------------/Quality support. Computers can improve the quality of decision made. For example, more data can be accessed, more alternatives can be evaluated, forecasts can be improved, risk analysis can be performed quickly, and the views of experts (some of whom are in remote locations) can be collected quickly and at a reduced cost./Agility support. Competition today is based not just on price but also on quality, timeliness, customization of products, and customer support.
/Decision support technologies such as intelligent systems can empower people by allowing them to make good decision quickly, even if they lack some knowledge.
/Overcoming cognitive limits in processing and storing information. According to Simon (1977), the human mind has only a limited ability to process and store information. People sometimes find it difficult to recall and use information in an error-free fashion due to their cognitive limits.
/Computerized systems enable people to overcome their cognitive limits by quickly accessing and processing vast amounts of stored information (see Chapter 2).
---------------------------------
1.5 COMPUTERIZED SUPPORT FOR DECISION MAKING
/Using the Wed. Wed provides (1) access to a vast body of data, information, and knowledge available around the world; (2) a common, user-friendly graphical user interface (GUI) that is easy to learn to use and readily available; (3) the ability to effectively collaborate with remote partners; and (4) the availability of intelligent search tools that enable managers to find the information they need quickly and inexpensively.
/Anywhere, anytime support. Using wireless technology, managers can access information anytime and from anyplace, analyze and interpret it, and communicate with those involved.
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